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Incumbent defense strategies against new product entry

Author: Gatignon, Hubert ; Robertson, T. S. ; Fein, A. J.INSEAD Area: Marketing Series: Working Paper ; 94/69/MKT Publisher: Fontainebleau : INSEAD, 1994.Language: EnglishDescription: 35 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: The objective of this study is to estimate the effectiveness of different defense strategies when faced with a new product introduction by a competitor. Using a sample of incumbents across a wide range of industries it is found that faster reactions to the new entrant have a positive impact on the perceived success of the defense strategy. However, the greater the breadth of reaction (number of marketing mix instruments used), the less successful the defense. The ability of an incumbent to maintain its market position is also significantly affected by industry characteristics and the degree of competitive threat posed by the entrant.
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The objective of this study is to estimate the effectiveness of different defense strategies when faced with a new product introduction by a competitor. Using a sample of incumbents across a wide range of industries it is found that faster reactions to the new entrant have a positive impact on the perceived success of the defense strategy. However, the greater the breadth of reaction (number of marketing mix instruments used), the less successful the defense. The ability of an incumbent to maintain its market position is also significantly affected by industry characteristics and the degree of competitive threat posed by the entrant.

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